Germany Considers Emissions Levy as CO2 Reduction Target Wobbles

  • Clean Air Act tax may be instrument to cut pollution
  • German consumers pay highest power prices after Denmark

Germany may have to implement a tax on emissions as it struggles to meet its target to cut carbon dioxide pollution by 2020, said Franzjosef Schafhausen, a senior government official.

The government’s decision in August to back away from measures that would close some of the most polluting coal plants raises questions about whether it can meet its pledge to rein in emissions across the economy by 2020, said Schafhausen, the deputy director general of climate change policy in the Environment Ministry, in an interview.

The government plans to cut CO2 emissions 40 percent by the end of the decade from 1990 levels as part of an effort led by the United Nations to limit pollution in all nations.
A new UN deal is due to be agreed in Paris in December that would extend global carbon reductions beyond 2020, and Germany is at the forefront of the effort. Just how the government will meet its goals before then isn’t clear.

“We’re discussing the possibility that additional charges such as taxes may need levying under Germany’s Clean Air Act,” Schafhausen said at a Bloomberg New Energy Finance conference in London.

As of this year, Germany has cut greenhouse emissions by 30 percent compared with the level in 1990.

Until a shift in policy this summer, the government was preparing force closure of the oldest lignite power plants. That measure would have helped Germany meet its pollution target. It was dropped after opposition from states and unions fearing job cuts.

Alternatives now include creating a lignite capacity reserve, cutting transport emissions, boosting energy efficiency and building more power-heat coupling plants. Those measures may not cut as much CO2 as hoped, Schafhausen said. 

Introducing a tax increase on power generation or wider industry to cut CO2 would be controversial in Germany, which has the second-highest power prices in the EU after Denmark.

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